SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[_] Definitive Proxy Statement RULE 14a-6(a)(2))

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

AMERAC ENERGY CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

AMERAC ENERGY CORPORATION
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[X] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

Notes:

AMERAC ENERGY CORPORATION
700 LOUISIANA, SUITE 3330
HOUSTON, TEXAS 77002

TO BE HELD ON JUNE 5, 1996

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the Stockholders of Amerac Energy Corporation:

It is my pleasure to invite you to attend the 1996 Annual Meeting of
Stockholders (the "Meeting") of Amerac Energy Corporation (the "Company"),
which will be held in the NationsBank Auditorium, 4th Floor, NationsBank
Center, 700 Louisiana, Houston, Texas, on June 5, 1996, at 2:00 p.m., local
time. The Meeting is being held to consider and take action with respect to
the following matters:

COMMON STOCK MATTERS:

(1) To elect five (5) Directors;

(2) To approve an amendment to the Company's Certificate of Designations
which is a part of the Company's Certificate of Incorporation (the
"Preferred Amendment") that provides for the conversion of each
outstanding share of the Company's $4.00 Senior Preferred Stock, $1.00
par value (the "Preferred Stock"), into nine (9) shares of the Company's
Common Stock, $.05 par value (the "Common Stock");

(3) To approve an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Common Stock from 50
million to 100 million;

(4) To ratify and approve the selection of Price Waterhouse LLP as the
Company's independent auditors for the 1996 fiscal year; and

(5) To transact such other business as may properly come before the Meeting
or any adjournment thereof.

PREFERRED STOCK MATTERS:

(1) To approve the Preferred Amendment; and

(2) To transact such other business as may properly come before the Meeting
or any adjournment thereof.

If holders of the requisite amount of each of the Common Stock and the
Preferred Stock approve the Preferred Amendment, the Company's Certificate of
Designations which is a part of the Company's Certificate of Incorporation
will be amended so that on June 6, 1996, each outstanding share of the
Preferred Stock will be converted into nine (9) shares of Common Stock, and
the Preferred Stock will be eliminated. The holders of approximately 20% of
the Preferred Stock entered into an agreement with the Company, prior to their
acquisition of such Preferred Stock, to vote in favor of the Preferred
Amendment.

Only the holders of shares of the Common Stock of record on the books of the
Company at the close of business on April 8, 1996, will be allowed to vote at
the Meeting, or any adjournment thereof, on the Common Stock Matters, and only
holders of shares of the Preferred Stock of record on the books of the Company
at the close of business on April 8, 1996, will be entitled to vote at the
Meeting, or any adjournment thereof, on the Preferred Stock Matters.

A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, accompanies this notice.

WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY AT YOUR EARLIEST
CONVENIENCE. A REPLY ENVELOPE IS PROVIDED FOR SUCH PURPOSE WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES.

By order of the Board of Directors,

JEFFREY L. STEVENS

Senior Vice President-Chief
Financial Officer and Secretary

May 4, 1996

AMERAC ENERGY CORPORATION
700 LOUISIANA, SUITE 3330
HOUSTON, TEXAS 77002

TO BE HELD ON JUNE 5, 1996

PROXY STATEMENT

FOR

ANNUAL MEETING OF STOCKHOLDERS

This Proxy Statement is submitted in connection with the solicitation of
proxies by the Board of Directors of Amerac Energy Corporation, a Delaware
corporation (the "Company"), for the Annual Meeting of Stockholders to be held
in the NationsBank Auditorium, 4th Floor, NationsBank Center, 700 Louisiana,
Houston, Texas on June 5, 1996 at 2:00 p.m., local time, or any adjournment
thereof (the "Meeting"), pursuant to the enclosed Notice of the Meeting. At
the Meeting matters relating to both the Company's Common Stock, $.05 per
value (the "Common Stock"), and the Company's $4.00 Senior Preferred Stock,
$1.00 per value (the "Preferred Stock"), will be voted on by the appropriate
stockholders at the Meeting. The approximate date this Proxy Statement and the
enclosed form of Proxy are first being sent to both the holders of the Common
Stock and the holders of the Preferred Stock (collectively, "Stockholders") is
May 4, 1996.

INFORMATION CONCERNING PROXIES

The persons named as proxies are Jeffrey L. Stevens and Jeffrey B. Robinson,
both of whom are presently directors of the Company. Stock represented at the
Meeting by the enclosed Proxy will be voted in the manner specified by each
Stockholder. A Proxy may be revoked by a Stockholder at any time prior to the
exercise thereof by filing with the Secretary of the Company a written
revocation or a duly executed Proxy bearing a later date. A Proxy shall be
revoked if a Stockholder present at the Meeting elects to vote in person.

Unless contrary instructions are indicated on a Proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked or suspended before they are voted) will be voted FOR;
(A) the following matters relating to the Common Stock (the "Common Stock
Matters"): (1) the election of five (5) Directors; (2) the approval of an
amendment to the Company's Certificate of Designations which is a part of the
Company's Certificate of Incorporation (the "Preferred Amendment") which
provides for the conversion of each outstanding share of Preferred Stock into
nine (9) shares of Common Stock; (3) the approval of an amendment to Article
IV of the Company's Certificate of Incorporation (the "Article IV Amendment")
increasing the number of authorized shares of the Common Stock from 50 million
to 100 million; (4) the ratification and approval of the selection of Price
Waterhouse LLP as the Company's independent auditors for the 1996 fiscal year;
and (5) to transact such other business as may properly come before the
Meeting; and (B) the following matters relating to the Preferred Stock (the
"Preferred Stock Matters"); (1) the approval of the Preferred Amendment; and
(2) to transact such other business as may properly come before the Meeting.

The cost of solicitation of proxies will be borne by the Company. In
addition to the use of mail, employees of the Company may solicit proxies by
telephone or telegraph, and the Company may employ proxy soliciting

agents who will receive customary compensation for such services. Upon
request, the Company will reimburse brokers, dealers, bankers, and trustees,
or their nominees, for reasonable expenses incurred by them in forwarding
proxy material to beneficial owners.

VOTING RIGHTS

Only Stockholders of record at the close of business on April 8, 1996 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, the issued and outstanding securities of the Company entitled to
vote at the Meeting consisted of 24,047,663 shares of the Common Stock and
1,826,539 shares of the Preferred Stock. Each outstanding share of the Common
Stock is entitled to one vote with respect to the Common Stock Matters to come
before the Meeting and each share of the Preferred Stock is entitled to one
vote with respect to the Preferred Stock Matters to come before the Meeting.
There are no cumulative voting rights.

The Common Stock and the Preferred Stock will be voted at the Meeting by
ballots (in person or by Proxy) which are tabulated by a person appointed by
the Board of Directors to serve as the inspector of election at the Meeting
and who has executed and verified an oath of office. A majority in interest of
the voting power of the outstanding shares of the Common Stock, represented in
person or by proxy, will be required to constitute a quorum with respect to
the Common Stock Matters and a majority in interest of the voting power of the
outstanding shares of the Preferred Stock, represented in person or by proxy,
will be required to constitute a quorum with respect to the Preferred Stock
Matters. Approval of each of the Common Stock Matters, other than the Article
IV Amendment and the Preferred Amendment, will be decided by the affirmative
vote of a majority of the Common Stock voting power present at the Meeting.
Approval of the Article IV Amendment will require the affirmative vote of a
majority of the outstanding Common Stock entitled to vote thereon and approval
of the Preferred Amendment will require the affirmative vote of a majority of
the outstanding shares of the Common Stock entitled to vote thereon and the
affirmative vote of a majority of the outstanding shares of the Preferred
Stock entitled to vote thereon. Abstentions and broker non-votes are included
in the determination of the number of shares present at the Meeting for quorum
purposes. Abstentions will have no effect on the outcome of the election of
directors, but will have the same effect as negative votes with respect to all
other matters to come before the Meeting. Broker non-votes will have the same
effect as negative votes with respect to all matters to come before the
Meeting.

The holders of approximately 20% of the Preferred Stock entered into an
agreement with the Company, prior to their acquisition of such Preferred
Stock, to vote in favor of the Preferred Amendment.

ELECTION OF DIRECTORS

The Bylaws of the Company provide that the Board of Directors shall consist
of five to fifteen members as fixed by the Board of Directors from time to
time. The Board of Directors has fixed at five the number of directors which
will constitute the Board of Directors for the ensuing year.

Five directors of the Company are to be elected to serve until the next
annual meeting of stockholders or until the election and qualification of
their respective successors. All the nominees named below currently serve as
directors of the Company. Mr. Thomas J. Edelman is currently a director and
Chairman of the Board of Directors. Mr. Edelman will not stand for reelection
due to attention required by his other business activities. The persons named
in the accompanying Proxy intend to vote (unless authority to vote for
directors is withheld in such Proxy) all duly executed Proxies unrevoked at
the time of the exercise thereof for the election to the Board of all of the
nominees named below, each of whom consented to be named herein and to serve
as a director if elected at the Meeting. In the event that any nominee should
become unavailable prior to the Meeting, the Proxy will be voted for a
substitute nominee designated by the Board of Directors if a substitute
nominee is designated. Listed below is certain information with respect to
each current nominee for election as a director. For information concerning
the number of shares of Common Stock and Preferred Stock beneficially owned by
each nominee, see "Principal Stockholders."

The Board of Directors recommends that the holders of the Common Stock vote
FOR the nominees listed below.

NAME AGE POSITION A DIRECTOR SINCE
---- --- -------- ----------------

Michael L. Harvey(1).... 48 Director 1995
William P.
Nicoletti(1)........... 50 Director 1995
Kenneth R. Peak(1)...... 50 Director 1995
Jeffrey B. Robinson..... 51 President, Chief Executive Officer and Director 1994
Jeffrey L. Stevens...... 47 Senior Vice President-Chief Financial Officer and 1992
Secretary and Director

- --------

(1) Member of the Audit, Compensation and Technical Committees.

Mr. Harvey has been a director of the Company since 1995. Since 1987, Mr.
Harvey has been chairman and Chief Executive Officer of the Gulfstar
Companies. The Gulfstar Companies explore and develop oil and gas exclusively
in the Gulf of Mexico. Mr. Harvey serves as a director of Gulfstar Energy,
Inc., Gulfstar Petroleum Corporation, and Gulfstar Operating Company. Mr.
Harvey also serves as a director of Black Diamond Exploration Corporation, a
privately owned onshore exploration company focused upon exploration and
development in South Texas. Mr. Harvey also serves on the advisory board of
the Texas A&M University College of Business.

Mr. Nicoletti has been a director of the Company since 1995. He is Managing
Director of Nicoletti & Company Inc., a New York based private investment
banking firm founded in 1991. Previously, Mr. Nicoletti was a Managing
Director and head of the Energy and Natural Resources Group of PaineWebber
Incorporated. He is a director of Star Gas Corporation, a Stamford,
Connecticut based propane gas distributor and StatesRail L.L.C., a Dallas,
Texas based short line railroad holding company.

Mr. Peak has been a director of the Company since 1995. Since 1990, Mr. Peak
has been the President of Peak Enernomics, Incorporated, a company engaged in
consulting activities in the oil and gas industry. From 1989 to 1990, Mr. Peak
was the Managing Director and Co-Manager Corporate Finance of Howard Weil
Incorporated, an investment banking firm. Mr. Peak is a director of N.L.
Industries, Inc., a manufacturer of titanium dioxide, and a director of
Fibrebond Corporation, a private company engaged in the manufacturing of
telecellular communication shelters and prison systems. Mr. Peak also serves
on the management committee of the College of Arts and Sciences at Ohio
University.

Mr. Robinson has been the President, Chief Executive Officer and a director
of the Company since 1994. Mr. Robinson was appointed on July 15, 1994, as
President and Chief Executive Officer of the Company. Prior to joining the
Company, Mr. Robinson was Vice President of Engineering and Operations with
Amax Oil and Gas Inc. from 1982 to 1994. From 1974 to 1981, Mr. Robinson
served as Vice President--General Manager of Ranger Oil Company.

Mr. Stevens has been Senior Vice President--Chief Financial Officer,
Secretary and a director of the Company since 1992. Mr. Stevens joined the
Company in 1974. Since May 1991, Mr. Stevens has been President and Chief
Executive Officer of Petroleum Financial, Inc. ("PFI"). See "Certain
Transactions."

PRINCIPAL STOCKHOLDERS

The following table sets forth information as to the number of shares of (1)
Common Stock and Preferred Stock beneficially owned as of April 30, 1996 by
each beneficial owner of more than five percent of the outstanding shares of
the Common Stock and the Preferred Stock, respectively and (2) the shares of
Common Stock and Preferred Stock beneficially owned as of March 1, 1996 by:
(I) the Chief Executive Officer and the current executive officers of the
Company who earned over $100,000 during the Company's last fiscal year (the
"Named Executive Officers"); (ii) each director; and (iii) all current
executive officers and directors of the Company as a group. All shares are
owned both of record and beneficially unless otherwise indicated. In
determining the "Percent of Class" the Company used the number of shares
issued and outstanding on April 30, 1996, consisting of 24,330,409 shares of
Common Stock and 1,826,539 shares of Preferred Stock.

AFTER
AMOUNT PREFERRED
BENEFICIAL OWNER TITLE OF CLASS BENEFICIALLY OWNED PERCENT OF CLASS AMENDMENT(6)
- ---------------- --------------- ------------------ ---------------- ------------

William T. Smith........ Common Stock 1,310,679 5.4% 3.2%
Suite P-IIG
777 Taylor Street
Fort Worth, TX 76102
Powell Resources Inc.... Common Stock 2,017,152 8.3% 4.9%
3030 N.W. Expressway
Suite 1602
Oklahoma City, OK 73112
Thomas J. Edelman....... Common Stock -0-(1) -- --
777 Main Street, Suite Preferred Stock -0-(1) -- --
2500
Fort Worth, Texas 76102
Michael L. Harvey....... Common Stock 138,306(2) .1% *
c/o Amerac Energy Cor-
poration
700 Louisiana, Suite
3330
Houston, Texas 77002
William P. Nicoletti.... Common Stock 337,414(2) 1.4% .8%
c/o Amerac Energy Cor-
poration
700 Louisiana, Suite
3330
Houston, Texas 77002
Kenneth R. Peak......... Common Stock 338,306(2) 1.4% .8%
c/o Amerac Energy Cor-
poration
700 Louisiana, Suite
3330
Houston, Texas 77002
Jeffrey B. Robinson..... Common Stock 1,719,032(3) 6.9% 4.1%
c/o Amerac Energy Cor-
poration
700 Louisiana, Suite
3330
Houston, Texas 77002
Jeffrey L. Stevens...... Common Stock 550,338(4) 2.2% 1.3%
306 W. 7th
Suite 1025
Fort Worth, Texas 76102
All directors and execu-
tive officers, as a
group (7 persons)(5).... Common Stock 3,283,396 13.5% 7.7%

- --------

* Less than .1%.

(1) Mr. Edelman is currently a director and is not standing for reelection. On
March 15, 1996 Snyder Oil Corporation ("SOCO"), of which Mr. Edelman is a
director and President, sold its 359,623 shares of Preferred Stock and on
April 24, 1996, sold its 1,039,210 shares of Common Stock.

(2) Includes vested options to purchase 40,000 shares of Common Stock and has
the right to acquire 50,000 shares pursuant to unvested options.

(3) Includes uninvested options to purchase 533,334 shares of Common Stock and
vested options to purchase 206,666 shares of Common Stock.

(4) Mr. Stevens' ownership includes 270,333 shares of Common Stock which Mr.
Stevens has the right to acquire pursuant to vested stock options and
166,667 of unvested options. In addition, his ownership includes 113,338
shares of the Common Stock owned by PFI of which Mr. Stevens is President
and Chief Executive Officer and a 74% stockholder.

(5) The group's (7 persons) ownership includes vested options to purchase
697,000 shares of Common Stock and 950,000 of unvested options.

(6) This column shows the percent of each class of stock beneficially held
assuming approval of the Preferred Amendment resulting in 40,769,260
issued and outstanding shares of Common Stock.

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company are elected annually by the Board at
its first meeting held following the annual meeting of stockholders, or as
soon thereafter as necessary and convenient in order to fill vacancies or
newly created offices. Each executive officer holds office until his
resignation or removal or until his successor is duly elected and qualified.
Any executive officer elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the best interests
of the Company will be served thereby.

The names of the Executive Officers of the Company, their ages, positions,
and the dates of their employment are set forth below:

NAME AGE POSITION HELD WITH THE COMPANY EMPLOYED SINCE
---- --- ------------------------------ --------------

Jeffrey B. Robinson..... 51 Director, President and Chief Executive Officer 1994
47 Director, Senior Vice President-Chief Financial Officer
Jeffrey L. Stevens...... and-Secretary 1974
Richard Savoie.......... 49 Vice President-Engineering 1994

BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The Board of Directors held six (6) meetings during the year ended December
31, 1995. All directors attended all such Board of Directors meetings, with
the exception of Mr. Harvey who each attended all but two meetings in 1995.

The Audit Committee of the Board of Directors is responsible for, among
other things, recommending the appointment of the independent public
accountants and reviewing their compensation; assuring that proper guidelines
are established for the dissemination of financial information; meeting
periodically with the independent accountants, the Board of Directors and
certain officers of the Company and its subsidiaries to assure the adequacy of
internal controls and reporting; reviewing consolidated financial statements
and performing any other duties or functions deemed appropriate by the Board
of Directors . During 1995, this committee met twice. Messrs. Peak, Nicoletti
and Harvey are members of the Audit Committee.

The Compensation Committee of the Board of Directors is responsible for
recommending compensation policies with respect to the directors, management
and employees of the Company. During 1995, this committee met twice. Messrs.
Peak, Nicoletti and Harvey are members of the Compensation Committee. The
Technical Committee of the Board is responsible for reviewing all acquisition
candidates. The Technical Committee comprised of Messrs. Harvey and Peak met
four times in 1995.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the total compensation (including salary,
bonus and all other forms of annual and long-term compensation) paid by the
Company during the fiscal years 1995 and 1994, for the Named Executive
Officers.

ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------- -------------------------------------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS($) SARSS(#) COMPENSATION(4)
- --------------------------- ---- -------- ------- ------------ ---------- ---------- ---------------

Jeffrey B. Robinson* ... 1995 $125,000 $28,000 $-0- $-0- $-0- $-0-
Chief Executive Officer 1994 $ 60,657 $ -0- $-0- $-0- $-0- $-0-

- --------
* Mr. Robinson was elected Chief Executive Officer on July 15, 1994

YEAR END OPTION VALUE TABLE

The following table sets forth information at December 31, 1995, respecting
exercisable and non exercisable options held by the Named Executive Officers.
The table also includes the value of "in-the-money" options which represents
the spread between the exercise price of the existing stock options and the
year end price of the Common Stock which was $0.22 per share.

VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS AT
SHARES ACQUIRED VALUE OPTIONS/SARS AT DECEMBER 31, DECEMBER 31, 1995 ($)
NAME AND PRINCIPAL POSITION ON EXERCISE (#) REALIZED 1995 (#) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------- --------------- -------- ---------------------------------- -------------------------

Jeffrey R. Robinson(*)
Chief Executive Offi-
cer................... -0- -0- 0/540,000 0/33,920

- --------
* Mr. Robinson was elected Chief Executive Officer on July 15, 1994

COMPENSATION OF DIRECTORS

During 1995, non-employee directors received a base retainer of $15,000,
payable quarterly, one-half in cash and one-half in Common Stock, and each of
the non-employee directors also received $500 per meeting attended and $200
per telephonic meeting. In 1994, each director of the Company was granted a
stock option under the Company's stock option plan to acquire 40,000 shares of
Common Stock. Effective July 1, 1995, the Board approved an additional payment
to the Chairman of the Board of $30,000 per annum, payable quarterly in Common
Stock. The Board also approved, effective October 1, 1995, that each non-
employee director serving on a committee receive an additional $1,000 per
annum and the chairman of each committee receive an additional $1,000 per
annum, payable quarterly in Common Stock.

REPORTS UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended, and the
rules thereunder, require the Company's executive officers and directors, and
persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the securities and Exchange Commission and to furnish the
Company with copies.

Based solely on its review of the copies of such forms received by it, or
written representations from such persons, the Company is not aware of any
person who failed to file any reports required by Section 16(a) to be filed
for fiscal 1995.

CERTAIN TRANSACTIONS

Effective May 1, 1991, as a cost reduction measure, the Company entered into
a service contract with PFI (of which the Company owns 26%), which was amended
and restated in October 1994, pursuant to which PFI performs all of the
Company's accounting, marketing, tax, administrative, financial, and treasury
services. The contract also encompasses all computer operations for the
Company as well as maintaining stockholder relations, SEC reporting, and
banking relations. Mr. Jeffrey Stevens, Senior Vice President--Chief Financial
Officer and Secretary and director of the Company owns 74% of PFI. The overall
compensation arrangement with PFI, in the opinion of the Company, is at least
as fair as could have been obtained for comparable services from an
unaffiliated third party. The aggregate service fees for 1995, 1994 and 1993
were $300,000, $350,000, and $500,000, respectively. Such service fees for
1996 are anticipated to be approximately $240,000. For 1996, PFI agreed to
perform its services for the Company at a monthly fee of $20,000, with
incentives if it is able to achieve certain goals.

THE PREFERRED AMENDMENT

GENERAL

The Company has been successful in substantially increasing its reserves
since changing its focus from exploration to growth through acquisitions and
exploration. The Company's reserve base has grown from 1,532,000 barrels of
oil equivalent ("BOE") at December 31, 1994 to 4,370,000 BOE at December 31,
1995, pro forma for the acquisition of Fremont Energy in January 1996. The
Board of Directors has determined that to continue the Company's policy of
growth through acquisitions, it is in the Company's best interest for the
Preferred Stock to be eliminated and Common Stock issued in its place for the
reasons set forth below. To achieve this goal, the Board of Directors believes
that it is in the best interests of the Company to amend the terms of the
Preferred Stock by providing for the elimination of this class and the
substitution therefore of nine (9) shares of the Common Stock for each
outstanding share of the Preferred Stock. Therefore, the Board of Directors
passed a resolution, subject to Stockholder approval, approving the resolution
to amend the terms of the Preferred Stock's Certificate of Designations which
is a part of the Company's Certificate of Incorporation. If approved,
effective June 6, 1996, each outstanding share of the Preferred Stock would be
automatically converted into nine (9) shares of the Common Stock and the
Preferred Stock would thereafter cease to exist. At April 30, 1996, there were
1,826,539 shares of Preferred Stock outstanding and approximately 500 holders
of those shares.

If the Preferred Amendment is adopted the Company will be required to issue
approximately 16,438,851 additional shares of Common Stock, increasing the
Company's outstanding shares of Common Stock from 24,330,409 to 40,769,260.
After the adoption of the Preferred Amendment the holders of the Preferred
Stock will hold 40.6% of the Common Stock outstanding. Therefore, if the
Preferred Amendment is adopted the current holders of the Preferred Stock
would own a significant percentage of the Common Stock and could, as a group,
have substantial influence on the affairs of the Company. The shares of Common
Stock which will be issued to the holder of the Preferred Stock will be exempt
from registration under the Securities Act of 1933, as amended (the "Act")
under Section 3(a)(9) of the Act and such shares will be freely tradeable.

The Board of Directors believes that adoption of the Preferred Amendment
would be in the best interests of the holders of both the Common Stock and the
Preferred Stock for the reasons set forth below, however, management owns
Common Stock and this fact should be considered when you are making your
decision. At April 30, 1996, no member of the Board of Directors or management
owned any shares of Preferred Stock either directly or beneficially.

DETERMINATION OF CONVERSION RATIO

As stated herein, management strongly believes that it is important to the
best interests of the Company that the Preferred Stock be converted into
Common Stock. In order to determine a conversion ratio which management
believed would be attractive to holders of Preferred Stock, while at the same
time being fair from a financial point of view, several principal factors were
considered, namely:

. The ratio of the trading market price of the Preferred Stock
(approximately $2 per share) to the trading price of the Common Stock
(approximately $.31 per share). This represented approximately a 6.5:1
conversion ratio.

. The ratio of the liquidation price of the Preferred Stock of $4.00 per
share to the trading price of the Common Stock would represent
approximately a 13:1 conversion ratio.

. The value of the liquidation preference of the Preferred Stock and
premium necessary to attract conversion. It was determined that a
premium of approximately 2.5 shares would be attractive while still
improving the net asset value per share, after conversion, to holders of
Common Stock.

. The net asset value per share of the Common Stock based on the present
value of oil and gas reserves less long term debt and the liquidation
value of the Preferred Stock all as adjusted for net current items.

This value was approximately $.24 per share for the Common Stock pre
exchange and $.32 per share post exchange assuming a 9:1 conversion
ratio.

. Management then conducted discussions with persons familiar with the
larger holders of Preferred Stock to determine the final exchange ratio
to be offered.

Based on its analysis and these further discussions, management reached the
conclusion that a conversion ratio of nine shares of Common Stock for each
share of Preferred Stock would be viewed favorably by holders of Preferred
Stock. As indicated above, it was determined that this conversion ratio would
also satisfy the objectives of the Company and increase the net asset value
per share of the Common Stock.

Final negotiations by management representing the holders of the Common
Stock were carried out with unaffiliated third parties who wished to purchase
approximately 20% of the Preferred Stock from SOCO with a view to the exchange
of the Preferred Stock into Common Stock. The interest of such individuals in
achieving the most favorable exchange ratio possible was aligned with the
interests of all holders of the Preferred Stock. Management was interested in
converting the outstanding Preferred Stock into Common Stock and eliminating
the Preferred Stock, for the reasons mentioned below. The individuals entered
into an agreement with the Company which provides that if such individuals
purchased such shares from SOCO, such individuals would vote to convert such
shares of Preferred Stock into Common Stock at a ratio of no less than nine
(9) shares of Common Stock for each share of Preferred Stock if the Company
chose to proceed with such a transaction. After the execution of such
agreements, the Company decided to proceed with such a transaction if these
individuals actually purchased the shares of Preferred Stock from SOCO. None
of the unaffiliated third parties who acquired the Preferred Stock from SOCO
held more than 5% of the Common Stock and there are no affiliations between
the unaffiliated third parties and SOCO. Also, the shares of Preferred Stock
sold by SOCO are the same shares shown in the Principal Stockholders Section
as being previously beneficially owned by Mr. Edelman. The Company was
informed that such individuals, after disclosing to SOCO their agreement with
the Company, purchased such Preferred Stock on March 15, 1996. The Board of
Directors concluded not to obtain a fairness opinion because of the cost of
obtaining such an opinion and because this ratio was accepted after an arms
length review by sophisticated unaffiliated third party investors.

ADVANTAGES AND DISADVANTAGES OF THE PREFERRED AMENDMENT

The adoption of the Preferred Amendment would have the following advantages
and disadvantages with respect to the current holders of the Common Stock,
current holders of the Preferred Stock and the Company:

(a) With respect to the holders of the Common Stock. Adoption of the
Preferred Amendment would be beneficial in that it would: (i) increase
the net asset value per share of the Common Stock, due to the
elimination of the liquidation value of the Preferred Stock; (ii)
enhance the Company's ability to raise additional capital, which would
enable the Company to maintain and/or increase the level of its
acquisition activities; (iii) eliminate the Company's obligation to, in
1997, pay cash dividends to the holders of Preferred Stock; and (iv)
eliminate the right of the holders of the Preferred Stock to elect 80%
of the Board if dividends on the Preferred Stock are not paid. The
adoption of the Preferred Amendment would be disadvantageous in that
the issuance of approximately 40% more Common Stock would dilute the
ownership percentage of the holders of the current Common Stock.

(b) With respect to the holders of the Preferred Stock. Adoption of the
Preferred Amendment would be beneficial in that it would: (i) increase
the market value of their investment (the conversion ratio provides a
premium of approximately 2.5 shares of Common Stock per share of
Preferred Stock over current trading prices); (ii) increase the
liquidity of their investment; and (iii) afford them participation in
the potential growth of the Company. The adoption of the Preferred
Amendment would be disadvantageous in that they would lose: (i) their
right to dividend payments; and (ii) their liquidation priority in
bankruptcy.

(c) With respect to the Company. Adoption of the Preferred Amendment would
be beneficial in that it would: (i) enhance the Company's ability to
raise additional capital to fund growth, by allowing the

Company to issue new preferred stock that is either pari passu or senior
to the Preferred Stock; (ii) increase the public float of the Common
Stock with potentially improved market liquidity and; (iii) eliminate
the need for the Company to begin paying cash dividends in 1997, thus
freeing up cash for its acquisition activities.. The adoption of the
Preferred Amendment would be disadvantageous to the Company in that the
Company would incur certain transaction costs in eliminating the
Preferred Stock and issuing the new Common Stock.

VOTE REQUIRED

The affirmative vote of a majority of the outstanding shares of the Common
Stock entitled to vote thereon and the affirmative vote of a majority of the
outstanding shares of the Preferred Stock entitled to vote thereon is required
for approval of the Preferred Amendment. If the Preferred Amendment is
adopted, it will become effective upon filing of the Preferred Amendment with
the Secretary of State of the State of Delaware.

The text of the Preferred Amendment is annexed hereto as Exhibit A.

The Board of Directors recommends a vote FOR this proposal.

THE ARTICLE IV AMENDMENT

The Company's Certificate of Incorporation currently authorizes 50 million
shares of common stock, $.05 par value per share, and 10 million shares of
preferred stock, $1 par value per share, of which 2 million have been
designated as $4.00 Senior Preferred Stock. On March 20, 1996 the Board
approved the Article IV Amendment which, if approved by the holders of the
Common Stock, would increase the number of shares of the Common Stock
authorized for issuance under the Certificate of Incorporation by 50 million,
from 50 million to 100 million. The Company is seeking the approval of this
amendment regardless of the passage of the Preferred Amendment.

If the Preferred Amendment is approved, the Company's outstanding Common
Stock will increase from 24,047,663 to 40,486,514. Since the Company only has
50,000,000 shares of the Common Stock currently authorized, the Board of
Directors believes that it is prudent to increase the number of authorized
shares of Common Stock to the proposed level in order to provide a reserve of
shares available for issuance in connection with possible future actions. Such
actions may include, but are not limited to, stock splits or stock dividends,
financings through the issuance of equity securities, acquisitions of property
or companies with the Company's stock, establishing strategic relationships
with corporate partners, employee benefit plans and for other general
corporate purposes. Currently there are no plans in place requiring the use of
these additional shares for these purposes. If the additional authorized
Common Stock is available for issuance, the Board of Directors would avoid
delays and expense occasioned by the necessity of obtaining stockholder
approval at the time the action is to occur, which will better enable the
Company to engage in these transactions.

The additional Common Stock to be authorized by adoption of the Article IV
Amendment would have rights identical to the currently outstanding Common
Stock of the Company. Adoption of the Article IV Amendment and issuance of the
Common Stock would not affect the rights of the holders of currently
outstanding Common Stock of the Company.

If the Article IV Amendment is approved, the Board of Directors may cause
the issuance of additional shares of the Common Stock without further vote of
stockholders of the Company, except as provided under the Delaware corporate
law or under the rules of any securities exchange on which shares of the
Common Stock are then listed. Current holders of the Common Stock have no
preemptive or like rights, which means that current stockholders do not have a
prior right to purchase any new issue of capital stock of the Company in order
to maintain their proportionate ownership thereof. The effects of the
authorization of additional shares of the Common Stock may also include
dilution of the voting power of currently outstanding shares and a reduction
of the portion of dividends and of liquidation proceeds payable to the holders
of currently outstanding Common Stock.

In addition, the Board of Directors could use authorized but unissued shares
of the Common Stock to create impediments to a takeover or a transfer of
control of the Company. Accordingly, the increase in the number of authorized
shares of the Common Stock may deter a future takeover attempt which holders
of the Common Stock may deem to be in their best interest or in which holders
of the Common Stock may be offered a premium for their shares over the market
price. The Board of Directors is not currently aware of any attempt to take
over or acquire the Company. While it may be deemed to have potential anti-
takeover effects, the Article IV Amendment to increase the authorized Common
Stock is not prompted by any specific effort or takeover threat currently
perceived by management.

The affirmative vote of a majority of the outstanding shares of the Common
Stock entitled to vote at the Meeting is required for the approval of this
proposal. If the Article IV Amendment is adopted, it will become effective
upon filing of the Article IV Amendment with the Secretary of State of the
State of Delaware.

The text of the Article IV Amendment is annexed hereto as Exhibit B:

The Board of Directors recommends a vote FOR this proposal.

SELECTION OF AUDITORS

The Board of Directors has appointed the firm of Price Waterhouse LLP as
independent public accountants for the Company for fiscal 1996, subject to
ratification at the Meeting.

Representatives of Price Waterhouse LLP will be present at the Meeting, with
the opportunity to make a statement if they desire to do so, and such
representatives are expected to be available to respond to appropriate
questions made at the Meeting. Price Waterhouse LLP served as the Company's
independent accountants for the Company during the 1995 and 1994 fiscal years.

The affirmative vote of a majority of the Common Stock voting power present
at the Meeting is required for the approval of this proposal.

The Board of Directors recommends a vote FOR this proposal.

INFORMATION CONCERNING STOCKHOLDERS PROPOSALS

A stockholder intending to submit a proposal to be presented at the 1997
Annual Meeting of Stockholders must deliver such proposal in writing to the
Company's principal executive offices no later than December 10, 1996.

OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING

The Company knows of no matters other than those above stated which are to
be brought before the Meeting. It is intended that the persons named in the
Proxy will vote their Common Stock according to their best judgment if any
other matters do properly come before the Meeting.

The Company's Annual Report on Form 10-K, which includes the Company's
audited financial statements, for the fiscal year ended December 31, 1995, is
being mailed concurrently herewith to all of the Company's stockholders of
record on the Record Date. The information in the Company's Annual Report on
Form 10-K under the captions "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Changes in and Disagreements
with Accountants on Accounting and Financial Disclosure" and the Company's
financial statements and notes thereto continued therein are incorporated
herein by reference.

Whether or not you intend to be present at the Meeting, you are urged to
return the enclosed Proxy promptly. If you are present at the Meeting and wish
to vote your stock in person, the Proxy shall, at your request, be revoked,
and you may vote at the Meeting with respect to those individual matters on
which you are entitled to vote.

By Order of the Board of Directors

JEFFREY L. STEVENS

Senior Vice President--Chief
Financial Officerand Secretary

Dated May 4, 1996

EXHIBIT A

CERTIFICATE OF AMENDMENT
OF THE CERTIFICATE OF INCORPORATION
OF AMERAC ENERGY
CORPORATION

AMERAC ENERGY CORPORATION, a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), pursuant to the provisions
of the General Corporation Law of the State of Delaware (the "GCL"), DOES
HEREBY CERTIFY as follows:

FIRST: The Certificate of Incorporation is hereby amended by adding to the
Certificate of Designations of the Corporation's $4.00 Senior Preferred Stock,
$1.00 par value, which was filed with the Secretary of State of the State of
Delaware on March 20, 1995, which is a part of the Corporation's Certificate
of Incorporation, a new Section 9 in the following form:

"Section 9. Conversion. Notwithstanding anything to the contrary contained
herein, at 9:00 A.M., Texas Time, on June 6, 1996 (the "Effective Time"),
by virtue of this Section 9 and without any action on the part of any
holder of the Senior Preferred Stock, each issued and outstanding share of
the Senior Preferred Stock shall be converted into nine (9) shares of
Common Stock. At the Effective Time each share of outstanding Senior
Preferred Stock shall automatically be cancelled on the books of the
Company and each such share of Senior Preferred Stock shall at such time be
replaced on the books of the Company with nine (9) shares of Common Stock
and each holder of Senior Preferred Stock immediately prior to the
Effective Time shall, at the Effective Time, cease being a holder of the
Senior Preferred Stock and will commence being a holder of the Common
Stock. As soon as practicable subsequent to the Effective Time, the
Company's transfer agent shall deliver to each former Senior Preferred
Stock holder certificates evidencing nine (9) shares of Common Stock for
each share of Senior Preferred Stock held, immediately prior to the
Effective Time, by such holder.

SECOND: The amendment to the Certificate of Incorporation of the Corporation
set forth in this Certificate of Amendment has been duly adopted in accordance
with the provisions of Section 242 of the GCL.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be signed by Jeffrey B. Robinson, its President, this day of June
1996.

AMERAC ENERGY CORPORATION

By:
----------------------------------
Jeffrey B. Robinson, President

EXHIBIT B

CERTIFICATE OF AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
OF AMERAC ENERGY CORPORATION

FIRST: The Certificate of Incorporation is hereby amended by deleting the
first paragraph of Article Fourth of the Certificate of Incorporation in its
present form and substituting, therefore, a new first paragraph of Article
Fourth in the following form:

"ARTICLE FOURTH" The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is One Hundred and Ten
Million (110,000,000) shares, consisting of One Hundred Million
(100,000,000) shares of Common Stock, par value $0.05 per share (the Common
Stock), and Ten Million (10,000,000) shares of Preferred Stock, par value
$1.00 per share (the "Preferred Stock").

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be signed by Jeffrey B. Robinson, its President, this day of May
1996.

AMERAC ENERGY CORPORATION

By:
----------------------------------
Jeffrey B. Robinson, President

AMERAC ENERGY CORPORATION
700 LOUISIANA, SUITE 3330, HOUSTON, TX 77002

ANNUAL MEETING OF STOCKHOLDERS--JUNE 5, 1996

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Jeffrey L. Stevens and Jeffrey B. Robinson, or
either of them, proxies of the undersigned with full power of substitution, to
vote all the shares of $4.00 Senior Preferred Stock, $1.00 par value (the
"Preferred Stock"), of Amerac Energy Corporation (the "Company") held of record
by the undersigned on April 8, 1996, at the Annual Meeting of Stockholders to
be held June 5, 1996 and at any adjournment thereof.

(1) To approve an amendment to the [_] FOR [_] AGAINST [_] ABSTAIN
Company's Certificate of
Designations which is a part
of the Company's Certificate of
Incorporation that provides for
the conversion of each
outstanding share of the
Preferred Stock into nine (9)
shares of the Company's Common
Stock, $.05 par value.

(2) In their discretion, the proxies [_] FOR [_] AGAINST [_] ABSTAIN
are authorized to vote upon such
matters as may properly come before
the meeting or any other adjournment
thereof.

(Continued and to be signed on the reverse side)

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED STOCKHOLDER, IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS
PROXY WILL BE VOTED "FOR" ITEM (1), AND IN THE PROXIES' DISCRETION ON ANY OTHER
MATTERS COMING BEFORE THE MEETING.

The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all the
said attorneys, agents, proxies, their substitutes or any of them may lawfully
do by virtue hereof.

------------------------------------
------------------------------------
Dated: _____________________ , 1996

Please date this Proxy and sign
your name exactly as it appears
hereon. When there is more than one
owner, each should sign, when
signing as an attorney,
administrator, executor, guardian,
or trustee, please add your title
as such. If executed by a
corporation, this Proxy should by
signed by a duly authorized
officer. If a partnership, please
sign in partnership name by
authorized persons.

PLEASE DATE, SIGN AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED IF MAILED IN THE UNITED STATES.

AMERAC ENERGY CORPORATION
700 LOUISIANA, SUITE 3330, HOUSTON, TX 77002

ANNUAL MEETING OF STOCKHOLDERS--JUNE 5, 1996

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Jeffrey L. Stevens and Jeffrey B. Robinson, or
either of them, proxies of the undersigned with full power of substitution, to
vote all the shares of Common Stock, $.05 par value (the "Common Stock"), of
Amerac Energy Corporation (the "Company") held of record by the undersigned on
April 8, 1996, at the Annual Meeting of Stockholders to be held June 5, 1996
and at any adjournment thereof.

(1) Election of [_]FOR all nominees listed [_]WITHHOLD AUTHORITY to vote
Directors below (except as indicated for all nominees listed
otherwise below) below

INSTRUCTION: To withhold authority to vote for an individual nominee, write
such nominees name in the space below.

NOMINEES: Michael L. Harvey, William P. Nicoletti, Kenneth R. Peak, Jeffrey
B. Robinson, Jeffrey L. Stevens
------------------------------------------------------------------------------
(2) To approve an amendment to the [_] FOR [_] AGAINST [_] ABSTAIN
Company's Certificate of
Designations which is a part of
the Company's Certificate of
Incorporation that provides for
the conversion of each outstanding
share of the Company's $4.00
Senior Preferred Stock, $1.00 par
value (the "Preferred Stock"),
into nine (9) shares of Common Stock.

(3) To approve an amendment to [_] FOR [_] AGAINST [_] ABSTAIN
the Company's Certificate of
Incorporation increasing the
number of authorized shares of
the Common Stock from 50 million
to 100 million.

(4) To ratify the selection of Price [_] FOR [_] AGAINST [_] ABSTAIN
Waterhouse LLP as the Company's
independent public accountants
for fiscal year 1996.

(5) In their discretion, the proxies [_] FOR [_] AGAINST [_] ABSTAIN
are authorized to vote upon such
matters as may properly come
before the meeting or any other
adjournment thereof.
(To be signed on the reverse side.)

- --------------------------------------------------------------------------------

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED STOCKHOLDER, IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THIS
PROXY WILL BE VOTED "FOR" ITEMS (1), (2), (3) and (4), AND IN THE PROXIES'
DISCRETION ON ANY OTHER MATTERS COMING BEFORE THE MEETING.

----------------------------

Dated: _________ , 1996

Please date this Proxy and
sign your name exactly as
it appears hereon. When
there is more than one
owner, each should sign.
When signing as an
attorney, administrator,
executor, guardian, or
trustee, please add your
title as such. If executed
by a corporation, this
Proxy should be signed by a
duly authorized officer. If
a partnership, please sign
in partnership name by
authorized persons.

Please date, sign and
return this Proxy Card in
the enclosed envelope. No
postage required if mailed
in the United States.